The speed of adjustment and the sequencing of economic reforms: Issues and guidelines for policymakers

Purpose – The purpose of the paper is to review the issues involved in determining the appropriate speed of adjustment and the sequencing of economic reforms, and to develop a checklist of key guidelines for policymakers as a basis for their decision-making process. Design/methodology/approach – The paper develops a conceptual framework based on a survey of the theoretical and empirical literature, and the practical experience of the authors in this area. Findings – The analysis in the paper shows that the optimal speed and sequence of reforms is country-specific. But key policy considerations can help guide policymakers in the design of their reform strategy. Practical implications – The arguments favoring a shock approach or a gradual approach are not absolute. Each country has to choose the proper speed of adjustment and sequencing of reforms by examining country-specific factors. A thorough case-by-case analysis is needed before a decision on the appropriate timing and sequencing of reforms can be made. Originality/value – The analysis in the paper leads to key reform guidelines for policymakers – covering areas such as prerequisites and resource constraints, political economy considerations, credibility and sustainability of reforms – that are instrumental in developing a well-sequenced strategy.